Do you need Employers’ Liability Insurance?

Who needs it?
If your business employs one or more members of staff, then you are legally required to take out Employers’ Liability Insurance. That doesn’t just mean full time members of staff. It also applies if you employ part time and temporary staff. Basically, if you employ staff on an agreed hourly rate on specific days and deduct National Insurance and income tax, then they must be covered by this insurance. You’ll also need it to cover staff you previously employed, as some injuries or illnesses can take time to develop.
 
Who doesn’t need it?
In some situations, Employers’ Liability insurance isn’t a legal requirement. For example, If your business is a limited company, a family business, or a sole trader with only one employee running the company, you may not need Employers’ Liability insurance. It doesn’t apply to sole traders, where the company is not limited and has one employee who runs the business.
 
What does it cover?
Employers’ Liability insurance offers protection for your business against claims made by past and present employees in relation to incidents where you may have been negligent and could be held legally liable. It covers you against lawsuits that could be brought following an injury, which could range from a secretary suffering from repetitive strain injury due to ongoing computer use in your office or an operative cutting themselves while using machinery right through to a worker falling off a ladder or scaffolding while doing construction work and requiring time off work due to the injuries sustained.
 
Payment made following claims such as these can be costly and could result in your business having to close down if you had to pay costs yourself. With Employers’ Liability insurance, you are fully covered against compensation payments and legal costs, ensuring that your business can keep operating.
 
How much cover do you need?
If your business is legally required to take out Employers’ Liability Insurance, the Employers’ Liability Act stipulates that you must have cover for at least £5 million. However, you may need more cover than this when you take into consideration your company’s risks and liabilities. The size of your business, number of people you employ and nature of your business are all factors to consider when arranging cover. Most insurers offer Employers’ Liability Insurance of at least £10 million, which may be advisable when you consider the costs involved if a member of staff were to take you to court and you had to pay compensation and legal costs.
 
What are the implications without cover?
If you are legally required to have Employers’ Liability cover and you don’t have it, you could face fines of up to £2,500 a day. You should also display your insurance certificate so that your employees can see it clearly or have access to it (for example, on a display board or in digital format on your company intranet). If you don’t, you could face a fine of £1,000.

At NLIG, we’ve been advising businesses on their insurance for many years and can ensure you have the correct level of protection in place, depending on the size and nature of your business and the industry-specific risks and liabilities you face. We will be happy to advise on the appropriate level of Employers’ Liability cover you require, along with any other cover applicable to your business.
 
Our business is your protection: to find out more about Employers’ Liability Insurance, call 01992 703 300 or email insurance@nlig.co.uk